September 18, 2019 Read More →

Philippines: Renewables could cut electricity rates by 30 percent

MSN Philippines News: 

HEAVY RELIANCE on imported fossil fuels, high financing costs and uncompetitive market structures have contributed to make electricity prices in the Philippines among the highest in Southeast Asia, according to a report of a global research institute.

“If renewables enter the market, they have the potential to cut wholesale power prices by 30% and could dramatically change the structure of the market,” the Institute for Energy Economics and Financial Analysis (IEEFA) said in a report released on Wednesday.

The report by Sara Jane Ahmed, energy finance analyst at the institute, cited these as among the three key trends in understanding the current outlook of the Philippine power sector and how its prospects have improved for the country’s energy transition.

The trends include legal challenges that have encouraged policies to spur competition through transparent bidding and to reduce electricity prices for consumers and industry may bring real competition.

IEEFA also pointed to Manila Electric Co. (Meralco), the country’s largest power distribution utility, as setting the trend for how it is adapting to market pressures. It said the company, which is also an independent power producer, could emerge as “a big winner or a damaged laggard.”

It said more retail competition is in the cards and the role of grid operators can also be forced to change as they may be barred from passing on fuel price and foreign exchange risk.

“One important reform would be to analyze the risk profile of take-or-pay imported fuel agreements. They represent fixed long-term obligations that should be balanced against the Philippines’ unique potential to benefit from newer technologies that are just coming to market,” it said.

More: Renewable energy could cut electricity rates by 30% — report

Posted in: IEEFA In the News

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